AR Finance Funding Receivables Purchase Facility | 7 Park Avenue Financial

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A/R Finance Funding:  Why The Receivables Purchase Facility Might Just Make Sense
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Oakville, Ontario
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AR Finance funding in Canada might make sense for your company. A simple reason why?  A receivables purchase facility works! We're examining 11 reasons why. Let's dig in.


First, let's ensure we all understand the basics. When it seems like everyone, your customers and your bank included, is hanging on to their money. Difficult challenges arise for cash flow and working capital needs. While large corporations and public companies can tap capital in numerous ways, SME COMMERCIAL FINANCE options are somewhat limited.


A receivables purchase facility is the simple ' monetizing ' of your 2nd most liquid asset on the balance sheet - your A/R. It's the ultimate in short-term financing, allowing your firm to cover daily operations and, as importantly, grow the business.


A/R Finance funding is a form of asset-based finance. Numerous other names for this method of Canadian business financing exist for the owner/mgr to digest - factoring, invoice discounting, etc.


While bank financing is almost always less expensive than AR finance via a commercial finance firm, a key point here is that A/R finance funding is a fee versus the ' interest rate' charged by the bank. When properly understood and calculated, this makes this working capital solution much more attractive. Unfortunately, many firms rarely take the time to understand the costs and mechanics.


Rarely does a Canadian business utilize a receivables purchase factoring facility for its needs forever? It's best viewed as a transition option during high growth or challenging times. The facility's attractiveness has companies in every industry in Canada looking to this solution for cash flow needs - and by the way, startups are welcome.


1. A/R Finance does not add any debt to your balance sheet


2. It’s a logical alternative to bank borrowing when Canadian chartered bank financing can’t be achieved


3. The application process is simple and straightforward


4. Overall financial quality of your firm is not the key requisite - it's all about the A/R


5. Typically, outside collateral is not required


6. Cash flow needs for daily operations are always covered by your growing sales


7. Typically, concentration issues are not an issue and can be dealt with - Some firms have a large portion of their business with only a small number of clients.


8. Owners personal credit history plays typically only a small part in final credit decisions


9. Profits can be enhanced, and costs lowered via the effective taking of supplier discounts - your firm now has the cash to do so


10.  Companies who choose Confidential A/R Financing can bill and collect their own receivables. This choice allows you to avoid any of the 'notification' required in traditional receivable factoring offered by 99% of the industry players.


If your firm is focused on staying ahead of the curve and growing, investigate A/R non-bank solutions. Speak to 7 Park Avenue Financial .. a  trusted, credible, and experienced Canadian business financing advisor who can assist you with your capital needs.


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Stan Prokop is the founder of 7 Park Avenue Financial and a recognized expert on Canadian Business Financing. Since 2004 Stan has helped hundreds of small, medium and large organizations achieve the financing they need to survive and grow. He has decades of credit and lending experience working for firms such as Hewlett Packard / Cable & Wireless / Ashland Oil